The purpose of this article is to analyze the business development and entrepreuriship of Japanese computer game companies such as SEGA, Namco, and Nintendo. Until the 1970's, these firms were all once small manufactures of amusement machines or toys. How did such relatively small firms in the urban area grow up to be the profitable corporations we see today? The first step is to analyze how they have been as the leading companies in the fragmented computer game market which has been characterized by frequent changes with increasing speed since the formative years of the industry. Nintendo, the first mover, created its business system based on the strategy of outsourcing in software production and quasi-integration of distributors as “Shoshinkai”. SEGA and Namco tried to attack Nintendo's system using the strategy of building internal software development capabilities, which generated software production organizations which are, in using Michael Cusumano's terminology, 'software factories'. The second step is to analyze the mechanism of the 'software factory' as in the case study of 'AM 2 ken' (the 2nd R & D division of arcade machines) of SEGA. Its origin is intrafirm venture business in the crisis era of the arcade game market in 1985. AM 2 ken has been developing and driving SEGA's innovation since then. Its software production is done by small cross functional teams, and its advantage is based on the communication 'on the shop floor', where old business resources and new technologies are combined. It enabled gestalt change from 'waterfall' model to 'revise' model in grasping the process flow of software production. The study shows that small manufacturers in the urban area pzoneeringly introduced basic hardware technology from US in 70's and created the new market by developing and concentrating on the innovation of software and contents. In this way, relatively small firms could grow by bypassing the demerit of economy of scale. Here is the logic of 'small is storong'.
It is interesting to examine how ANA (All Nippon Airways) has developed during the period of rigid state intervention between the 1960 s and the early 1970 s. In this paper we will investigate their strategy in the period. We will concentrate on the following policies; investment and finance. One of the most significant issues for their development was how to invest in aircraft. They had been in a position to catch up with JAL (Japan Air Lines) in major routes in the period. They achieved this by introducing high performance aircraft more positively than JAL. On minor routes ANA frequently replaced aircraft in order to maintain high performance. Those policies encouraged the opening of new minor routes and stimulated increasing demand for air transport. Another important matter was how to finance the purchasing of aircraft. During the first half of the 1960 s ANA had not yet been in a position to borrow money from banks in the U. S. or even in Japan, except for the Japan Development Bank which did not however offer enough finance for this purpose. Therefore they had to depend on commercial credit from 'Shosha' (Japanese trading companies) or credit from airplane manufacturers. However a good opportunity arose when they purchased jet planes from Boeing Co., Ltd. in 1964. U. S. banks provided funds with lower interest rates. Valuing their aircraft in the terms of accelerated deprecation ANA quickened to repay the loan. It was the characteristic of their business strategy that they used their aircraft effectively and was financed from U. S. banks. These policies enabled ANA to grow to become now the largest domestic airlines in Japan.